The United States entered a government shutdown on October 1, 2025, after Congress failed to agree on full-year appropriations or a short-term funding bill. Although shutdowns have occurred before, the timing, speed, scale, and motives behind this one make it unique. This is the first shutdown since the last Trump term in 2018–19, which lasted 35 days, the longest in history.For traders, understanding both the mechanics and the ripple effects is essential to anticipating how markets may respond, particularly if the shutdown draws out to multiple weeks as currently anticipated.

What Is a Government Shutdown?

A government shutdown occurs when Congress fails to pass appropriation bills or a temporary extension to fund government operations for the new fiscal year beginning October 1.Without the legal authority to spend, federal agencies must suspend “non-essential” operations, while “essential” services such as national security, air traffic control, and public safety continue, often with employees working unpaid until funding is restored.Since the Government Employee Fair Treatment Act of 2019, federal employees are guaranteed back pay to cover lost wages once the shutdown ends, although there has been some narrative from the current administration that some may not be returning to work at all.

Why Did the Government Shutdown Happen?

The 2025 impasse stems from partisan disputes over spending levels, health-insurance subsidies, and proposed rescissions of foreign aid and other programs. The reported result is that around 900,000 federal workers are furloughed, and another 700,000 are currently working without pay.Unlike many past standoffs, there was no stopgap agreement to keep the government open while negotiations continued, making this shutdown more disruptive and unusually early.

Why an Early Shutdown?

Historically, most shutdowns don’t occur immediately on October 1. Lawmakers typically kick the can down the road with a “Continuing Resolution (CR)”. This is a stopgap measure that can extend existing funding for weeks or months to allow time for an agreement later in the quarter.The speed of the breakdown in 2025, with no CR in place, is unusual compared to past shutdowns. It suggests it was not simply budgetary drift, but a potentially deliberate refusal to extend funding.

Alternative Theories Behind the Early Shutdown

While the main narrative coming from the U.S. administrators points to budget deadlock, several other theories are being discussed across the media:

• Executive Leverage – The White House may be using the shutdown as a tool to increase bargaining power and force structural policy changes. Health care is central to the debate, funding for which was impacted significantly by the “one big, beautiful bill” recently passed through Congress.
• Hardline Congressional Factions – Small but influential groups within Congress, particularly on the right, may be driving the shutdown to demand deeper cuts.
• Political Messaging – The blame game is rife, despite the reality that Republican control of the presidency, House, and Senate, as well as both sides, is indulging in the usual political barbs aimed at the other side. As for the voter impact, Recent polls show that voters are placing more blame on Republicans than Democrats at this point, though significant numbers of Americans suggest both parties are responsible
• Debt Ceiling Positioning – Creating a fiscal crisis early could shape the terms of future negotiations on borrowing limits.
• Electoral Calculus – With midterms ahead, both sides may be positioning to frame the narrative for voters.
• Systemic Dysfunction – A structural view is that shutdowns have become a recurring feature of hyper-partisan U.S. politics, rather than exceptions.

Short-Term Impact of Government Shutdown

AreaImpactFederal workforceHundreds of thousands have been furloughed with reduced services across various agencies.Travel & aviationFAA expects to furlough 11,000 staff. Inspections and certifications may stall. Safety concerns may become more acute if prolonged shutdown.Economic outputThe White House estimates a $15 billion GDP loss per week of shutdown (source: internal document obtained by “Politico”.Consumer spendingFederal workers and contractors face delayed income, pressuring local economies. Economic data releaseKey data releases may be delayed, impacting the decision process at the Fed meeting later this month.Credit outlookScope Ratings and others warn that the shutdown is “negative for credit” and could weigh on U.S. borrowing costs.Projects & researchInfrastructure, grants, and scientific initiatives are delayed or paused.

Medium- to Long-Term Impact of Government Shutdown

1. Market Sentiment

Shutdowns show some degree of U.S. political dysfunction. They can weigh on confidence and subsequently equity market and risk asset sentiment. To date, markets are shrugging off a prolonged impact, but a continued shutdown into later next week could start to impact.Equity markets have remained strong, and there has been no evidence of the frequent seasonal pullback we often see around this time of year.Markets have proved resilient to date, but one wonders whether this could be a catalyst for some significant selling to come.

2. Borrowing Costs

Ratings downgrades could lift Treasury yields and increase debt-servicing costs. The Federal Reserve is already balancing sticky inflation and potential downward pressure on growth. This could make rate decisions more difficult.

3. The Impact on the USD

Rises in treasury yields would generally support the USD. However, rising concerns about fiscal stability created by a prolonged shutdown may put further downward pressure on the USD. Consequently, it is likely to result in buying into gold as a safe haven. With gold already testing record highs repeatedly over the last weeks, this could support further moves to the upside.

4. Credibility Erosion

Repeated shutdowns weaken the U.S.’s reputation as the world’s most reliable borrower. With some evidence that tariffs are already impacting trade and investment into the US, a prolonged shutdown could exacerbate this further.

What Traders Should Watch

For those who trade financial markets, shutdowns matter more for what they could signal both in the short and medium term. Here are some of the key asset classes to watch:

• Equities: Likely to see volatility as political risk rises, and the potential for “money off the table” after significant gains year-to-date for equities.
• U.S. Dollar: With the US dollar already relatively weak, further vulnerability if a shutdown feeds global doubts about U.S. fiscal stability.
• Gold and other commodities: May continue to gain as hedges against political and credit risk. Oil is already threatening support levels; any prolonged shutdown may add to the bearish narrative, along with other economic slowdown concerns
• Outside the US: With the US such a big player in global GDP, we may see revisions in forward-looking estimates, slingshot impacts on other global markets and even supply chain disruptions with impact on customs services (potentially inflationary).

Final Word

The 2025 shutdown is unusual because of its scale and because it started on Day 1 of the fiscal year, without even a temporary extension. That speed points to a deeper strategic and political contribution beyond the usual budget wrangling that we see periodically.For traders, the lesson is clear: shutdowns are not just what happens in Washington, but may impact confidence, borrowing costs, and market sentiment across a range of asset classes. In today’s world, where political credibility is a form of capital, shutdowns have the potential to erode the very foundation of the U.S.’s role in global finance and trade relationships.

Last year was the year of the split. Tech titans like Nvidia, Broadcom, and MicroStrategy all executed 10-for-1 stock splits that sent retail investors (rightly or wrongly) into a buying frenzy.

But despite multiple major stocks climbing to record-high levels this year — Netflix $1,200, Meta $760, and AutoZone $4,200 — we have yet to see any significant split action in 2025.

Why Companies Split Their Stock

A stock split is financial engineering. It makes individual shares more affordable without changing the company's underlying value.

When a company executes a 4-for-1 split, shareholders receive four shares for every one they previously owned, while the stock price drops to one-quarter of its pre-split level. It doesn’t change the overall market capitalisation of the company or anything from a foundational value perspective.

However, it can have some psychological benefits and add flexibility for the company, which can often be enough for markets to rally around it.

Companies typically split their stock for a few key reasons:

Accessibility: High stock prices can deter smaller investors who prefer to buy full shares rather than fractions. A $1,000 stock becomes more psychologically appealing at $100 after a 10-for-1 split.

‍Liquidity: For the same psychological reasons, lower prices often increase trading volume, and the higher liquidity makes the stock even more appealing for further retail investments and lower-risk traders.

‍Employee compensation: Splits give greater flexibility when granting employees shares through stock option programs.

‍Market inclusion: Some indices, particularly the Dow Jones, favour companies with more moderate share prices.

Stock Splits So Far in 2025

Although at a far more measured pace than we saw in 2024, this year has seen some split activity, especially from outside the tech sector. Four prominent non-tech companies have completed forward splits so far in 2025:

• Coca-Cola Consolidated (COKE): Announced a 10-for-1 split
• O'Reilly Automotive (ORLY): Completed a 15-for-1 split
• Interactive Brokers (IBKR): Executed a 4-for-1 split in June
• Fastenal (FAST): Implemented a 2-for-1 split

However, the tech sector, which dominated split headlines in 2024, has been notably quiet this year.

Next Top Stock Split Candidates

1. Netflix (NFLX) - $1,200+ Per Share

Netflix is the most likely candidate for a 2025 stock split. The company's share price pushed through the $1,200 barrier for the first time following the release of positive financial results for H1 2025.

Netflix has conducted two stock splits in the past: a 2-for-1 stock split in 2004, and a 7-for-1 stock split in 2015 when its price hit $650 per share — almost half of what it is currently.

Netflix reported 18.9 million new subscribers during Q4 2024  (significantly more than the 8.2 million Wall Street forecast), and its advertising revenue is also expected to double by the end of 2025.If its momentum continues, Netflix executing a split before the end of the year is highly likely.

2. Meta Platforms (META) - $760+ Per Share

Meta is the only member of the Magnificent Seven stocks to never carry out a split. META currency trades at over $760 — a threshold where many companies regularly consider splitting.

Meta's winning streak over the past year drove its shares to an all-time high of $790 in August, and it is the top performer in 2025 among the Magnificent Seven.

Meta posted earnings beats of $47.5 billion in revenue in July, well above the $44.83 billion expectation, with earnings per share hitting $7.14 compared to the expected $5.89.

There is high speculation that the company could announce its first-ever split before the end of 2025. Its heavy AI spending, including raising 2025 AI expenditures to $66-72 billion, shows Meta’s confidence in its trajectory and would justify a stock split within the next few months.

3. Microsoft (MSFT) - $510 + Per Share

Microsoft currently trades around $510 per share. Its all-time high of $555.45 per share came in July 2025, driven by AI growth and cloud dominance.

Microsoft has executed nine stock splits since going public in 1986, with the most recent occurring in 2003, when shares traded around $48.The 22-year gap since the last split is the longest drought in the company's history, with all previous splits occurring below $200 per share.

Microsoft is one of only two stocks in the price-weighted Dow Jones Industrial Average trading above $500, alongside Goldman Sachs.

The Dow's price-weighted structure means higher-priced stocks have disproportionate influence on the index, creating pressure from S&P Dow Jones Indices to maintain balance.

There is also a competitive precedent for Microsoft to split. Its long-time rival, Apple, executed a split in 2020 when its stock was in the $450 range. And other tech giants, such as Nvidia and Broadcom, have also recently split their stocks, setting a strong precedent for Microsoft to follow.

4. Costco Wholesale (COST) - $960+ Per Share

Costco's consistent growth and near $1000 per share price make it a likely split candidate in the next 6-12 months. The company has split its stock multiple times in the past, but its last split was over 25 years ago in 2000. The stock is up 2,780% since then.

Costco’s reported Membership fee revenue increased 10% to $5.3 billion from June 2024 to May 2025, and its overall revenue of $268.78 billion is up 5.94% during the same period.

Despite the positive numbers, Costco’s management has remained noncommittal when asked about split plans, making timing uncertain despite the strong financial case.

5. AutoZone (AZO) - $4,230+ Per Share

AutoZone's current stock price ironically exceeds the cost of many used cars for which it sells parts.

Despite its massive per-share price, AutoZone has avoided splitting since 1994. The company's share buyback programs have nearly halved the share count in the past ten years, pushing the price higher.

This massive share price alone puts it firmly on the upcoming split candidate list. However, its history shows that they often delay and defy the split norm.

Stock Splits Are a Result, Not a Cause

Stock splits generate excitement, but they don’t change a business's fundamental value or the total value of the shares owned by shareholders.

Although research suggests split stocks often outperform broader markets in the 12 months following the announcement, this is generally a correlation, not a causation.

It is the strong business fundamentals that justified the split in the first place that usually lead to market outperformance, rather than the split itself. Anyone considering these stocks should focus on business fundamentals rather than split speculation.

That said, stock splits can generate hype and serve as catalysts for broader market attention. If the marketing strategy around the split is done well, it can help the company generate more interest from retail investors than otherwise anticipated.

Looking Ahead

2025 has seen fewer tech company stock splits than 2024, setting the stage for major announcements in the coming months. Companies like Netflix and Meta face increasing pressure to make their shares more accessible as prices reach new highs.

The next wave of stock splits will likely come from these established leaders whose strong business performance has driven their share prices to split-warranting levels.

Whether these companies ultimately decide to split their stocks remains to be seen, but the fundamental case for each remains strong regardless of corporate actions.

Despite living through one of the most chaotic political and trade environments in recent history, the ASX 200 delivered its strongest performance since the pandemic rally.The S&P/ASX 200 Index gained 9.97% in capital growth and 13.81% in total returns, hitting a record high of 8,639.1 points in June.While Trump's tariff announcements caused dramatic market swings — including the ASX plunging nearly 500 points on "Liberation Day" — Australian markets weathered the storm and managed to rally before the financial year end.The rally was driven primarily by heavyweight banks like Commonwealth Bank and Westpac, with CBA alone responsible for nearly half the index's gains.However, the performance was not uniform across all sectors — five of the 11 ASX market sectors actually lost value during the financial year.

Sector Performance Rankings

Financials

The ASX 200 financials sector was the top-performing market sector of FY25, with the Financials Index rising by 24.45% and delivering total returns including dividends of 29.39%.Sector Champion: Despite Commonwealth Bank's headline-grabbing 45% rise that captured most investor attention, it was retirement and general investment solutions provider, Generation Development Group (ASX: GDG), that led the sector with a rise of 114% in FY25.

Technology - AI Boom Continues

The Information Technology Index rose by 23.89% and provided a total return of 24.19%.Sector Champion: TechnologyOne outperformed both its FY24 and 1H25 earnings expectations — 9.8% and 11.3% on each result respectively. ASX:TNE rose 121% during FY25 to close at $41.01.

Communications

The Communications Index gained 23.4% for the year.Sector Champion:EVT topped the communication leaderboard in FY25. The stock has largely traded nowhere since 2015, but found some momentum thanks to a bump in earnings from its cinema business, with the stock rising 41%.

Industrials

The Industrials Index gained 22% during FY25.Sector Champion: Qantas Airways (ASX:QAN) shares rose 84% to close at $10.74. Lower jet fuel prices, strong international and domestic pricing, and capacity growth gave investors renewed confidence in the leading Australian airline.

Consumer Discretionary

The Consumer Discretionary Index rose 18% for the year.Sector Champion: Temple & Webster Group (ASX:TPW) dominated the sector with a 127% gain to $21.32. Improved consumer sentiment and strong sales saw the e-commerce furniture company capitalise on momentum, especially in its home improvement and B2B categories.

Real Estate & REITs

The Real Estate Index gained 10% despite volatile bond yields throughout the year.Sector Champion: Charter Hall Group (ASX:CHC) was the sector leader — closing the financial year 72% higher at $19.19 per share.[caption id="attachment_712086" align="alignnone" width="1101"]

Top-performing sectors in FY25[/caption]

Utilities

The Utilities Index fell 1.6%.Sector Champion: APA Group (ASX:APA) managed a modest 2.3% gain in FY25, but managed to come out above its peers as the sector's best performer.

Consumer Staples

The Consumer Staples Index declined 2.1%.Sector Champion: Bega Cheese (ASX:BGA) led the sector with a 28% gain, backing up its strong FY24 results.

Healthcare

The Healthcare Index fell 5.99% despite some individual standouts.Sector Champion: Sigma Healthcare's merger with Chemist Warehouse created one of the biggest rallies of the year. As the merger gained clarity, the stock's potential inclusion in the S&P/ASX 200 drove strong buying from investors. Sigma (ASX:SIG) gained 135% to close at $2.99.

Materials

The second-worst sector was materials, with the Materials Index dropping 6.04%. Sector Champion: Despite sector struggles, gold miner Regis Resources (ASX:RRL) ascended 150% to close at $4.39, benefiting from rising gold prices.

Energy - The Year's Biggest Loser

The worst-performing ASX sector was energy, with the Energy Index falling 13.52%. Influences largely by the sector's largest stock — Woodside Energy Group — crumbling by 16%, closing at $23.66. Sector Champion: Uranium explorer Deep Yellow (ASX:DYL) stood out in the struggling sector with a 25% gain.[caption id="attachment_712087" align="alignleft" width="1051"]

Worst-performing sectors in FY25[/caption]

Looking Ahead

The results of FY25 tell a simple story: execution matters more than sector. Technology and financials thrived because the best companies in these sectors did what they said they would do. Energy and materials struggled because many companies in these sectors are fighting structural headwinds, not just cyclical ones. The market is becoming more about which companies to back, rather than which sectors to back. Looking forward to FY26, this pattern could become even more pronounced as geopolitical tensions and trade wars see market uncertainty become the norm rather than the exception.

The ASX 200 closed out the 2025 financial year on a high, reaching a new intra-month peak of 8,592 in June and within touching distance of the all-time record. The index delivered a 1.4% total return for the month, rounding off a strong final quarter with a 9.5% return and locking in a full-year gain of 13.8% — its best performance since 2021.This strong finish all came down to the postponement of the Liberation Day tariffs. From the April 7 lows through to the end of the financial year, the ASX followed the rest of the world. Mid-cap stocks were the standout performers, beating both large and small caps as investors sought growth opportunities away from the extremes of the market. Among the sectors, Industrials outperformed Resources, benefiting from more stable earnings and supportive macroeconomic trends tied to infrastructure and logistics.But the clear winner was Financials, which contributed an incredible 921 basis points to the overall index return. CBA was clearly the leader here, dominating everything with 457 basis points on its own. Westpac, NAB, and others also played a role, but nothing even remotely close to CBA. The Industrials and Consumer Discretionary sectors made meaningful contributions, adding 176 and 153 basis points, respectively. While Materials, Healthcare, and Energy all lagged, each detracting around 45 to 49 basis points. Looking at the final quarter of the financial year, Financials were by far the biggest player again, adding 524 basis points — more than half the quarter’s total return of 9.5%. Apart from a slight drag from the Materials sector, all other parts of the market made positive contributions. Real Estate, Technology, and Consumer Discretionary followed behind as key drivers. Once again, CBA was the largest individual contributor, adding 243 basis points in the quarter, while NAB, WBC, and Macquarie Group added a combined 384 basis points. On the other side of the ledger, key underperformers included BHP, CSL, Rio Tinto, Treasury Wine Estates, and IDP Education, which all weighed on quarterly performance.One of the most defining features of the 2025 financial year was the dominance of price momentum as a market driver — something we as traders must be aware of. Momentum strategies far outpaced more traditional, fundamental-based approaches such as Growth, Value, and Quality. The most effective signal was a nine-month momentum measure (less the most recent month), which delivered a 31.2% long-short return. The more commonly used 12-month price momentum factor was also highly effective, returning 23.6%. By contrast, short-term reversals buying last month’s losers and selling last month’s winners was the worst-performing approach, with a negative 16.4% return. Compared to the rest of the world, the Australian market was one of the strongest trades for momentum globally, well ahead of both the US and Europe, despite its relatively slow overall performance.Note: these strategies are prone to reversal, and in the early days of the new financial year, there has been a notable shift away from momentum-based trading to other areas. Now is probably too early to say whether this marks a sustained change, but it cannot be ignored, and caution is always advised.The second big story of FY26 will be CBA. CBA’s growing influence was a key story of FY25. Its weight in the index rose by an average of 2.1 percentage points across the year, reaching an average of 11.5% by June. That helped push the spread between the Financials and Resources sectors to 15.8 percentage points — the widest gap since 2018. Despite the strong cash returns, market valuations are eye-watering; at one point during June, CBA became the world’s most expensive bank on price metrics. The forward price-to-earnings multiple now sits at 18.9 times. This is well above the long-term average of 14.7 and higher than the 10-year benchmark of 16.1. Meanwhile, the dividend yield has slipped to 3.4%, down from the historical average of 4.4%. Earnings momentum remains soft, with FY25 growth estimates still tracking at 1.4%, and FY26 forecast at a moderate 5.4%. This suggests that recent gains have come more from expanding valuation multiples than from actual earnings upgrades, making the August reporting date a catalyst day for it and, by its size, the market as a whole.On the macro front, attention now turns to the Reserve Bank of Australia. The central bank cut the cash rate by 25 basis points to 3.6% at its July meeting. Recent commentary from the RBA has taken on a more dovish tone, with benign inflation data and ongoing global uncertainty expected to outweigh the strength of the labour market. The RBA appears to be steering toward a neutral policy stance, and markets will be watching for further signals on how that shift will be managed. Recent economic data has been mixed. May retail sales were weaker than expected, while broader household spending indicators held up slightly better. Building approvals saw a smaller-than-hoped-for bounce, employment remains strong, but productivity is low. Inflation is now at a 3-year low and falling; all this points to underlying support from the RBA’s easing bias both now and into the first half of FY26.As we move into FY26, the key questions are:

1. Can fundamentals wrestle back control over momentum?
2. Will earnings growth catch up to price to justify valuations?
3. How will policy decisions from the RBA and other central banks shape investor sentiment in an ever-volatile world?

While the early signs suggest a possible rotation, the jury is still out on whether this marks a new phase for the Australian market or just a brief pause in the rally that defined FY25.

1. Inflation Uncertainty

While recent data has shown core inflation moderating, core PCE is on track to average below target at just 1.6% annualised over the past three months.Federal Reserve Chair Jerome Powell made clear that concerns about future inflation, especially from tariffs, remain top of mind.“If you just look backwards at the data, that’s what you would say… but we have to be forward-looking,” Powell said. “We expect a meaningful amount of inflation to arrive in the coming months, and we have to take that into account.”While the economy remains strong enough to buy time, policymakers are closely monitoring how tariff-related costs evolve before shifting policy. Powell also stated that without these forward-looking risks, rates would likely already be closer to the neutral rate, which is a full 100 basis points from current levels.

2. The Unemployment Rate anchor

Powell repeatedly cited the 4.2% unemployment rate during the press conference, mentioning it six times as the primary reason for keeping rates in restrictive territory. At this level, employment is ahead of the neutral rate.“The U.S. economy is in solid shape… job creation is at a healthy level,” Powell added that real wages are rising and participation remains relatively strong. He did, however, acknowledge that uncertainty around tariffs remains a constraint on future employment intentions.If not for a decline in labour force participation in May, the unemployment rate would already be closer to 4.6%. Couple this with the continuing jobless claims ticking up and hiring rates subdued, risks are building around labour market softening.

3. Autumn Meetings are Live

While avoiding firm forward guidance, Powell hinted at a timeline:“It could come quickly. It could not come quickly… We feel like the right thing to do is to be where we are… and just learn more.”This suggests the Fed will remain on hold through the July meeting, using the summer to assess incoming data, particularly whether tariffs meaningfully push inflation higher. If those effects prove limited and unemployment begins to rise, the stage could be set for a rate cut in September.

The US has entered the Israel-Iran war. However, despite an initial 4 per cent surge on the open, oil has settled where it has been since the conflict began in early June — around US$72 to US$75 a barrel.Trump claims the attacks from the US on Iranian nuclear facilities over the weekend are a very short, very tactical, one-off. This is something his base can get behind — some really big conservative players do not want a long-contracted war that sucks the US into external disputes.Whether this will be the case or not is up for debate, but there is a precedent from Trump's first presidency that we can look to. Iran had attacked several American bases in 2019, as well as attacking Saudi Arabia's most important oil refinery with Iranian drones. There wasn't a huge amount of damage; it was more a symbolic movement and display of capabilities by Iran.Initially, Trump didn't react — it took pressure from Gulf allies like the UAE and Israel for him to respond, which saw him order the assassination of the head of the Iranian Defence Force, Qasem Soleimani. This led to an Iranian response of ‘lots of noise’ and ‘cage rattling’, but minimal real action events, just a few drone attacks. Trump is betting on the same reaction now.If Iran follows the same patterns from the previous engagement, the geopolitical side of this is already at its peak.As of now, Iran is not going after or destroying major Gulf energy capabilities. Nor have there been any disruptions to the shipping traffic through the Strait of Hormuz. In fact, apart from a posturing vote to block the Strait, Iran has not made any indication that it is going to disrupt oil in any way that would lead to price surges.Additionally, despite the U.S. military equipment buildup in the region being its highest since the Iraq war, critical Iranian energy infrastructure is running largely unscathed.This all suggests that the geopolitics and the physical and futures oil markets remain disconnected. Oil will spike on news rumours, but the actual impacts in the physical realm to this point remain low. Of course, this could change in future. But, for now, the risk of seeing oil move to US$100 a barrel is still a minority case rather than the majority.